Estate planning enters 21st century

It is not a social media story. And yet you know the medium has come of age when your Facebook and Twitter accounts and photos are considered digital assets that must be part of your estate planning.

The new frontiers of estate planning also include provisions for non-financial assets such as aging parents and pets, according to a BMO Retirement Institute report that stresses estate planning needs to evolve to keep up with the 21^st century societal landscape.

“As our society continues to evolve, the scope of our estate plans needs to widen,” said Tina Di Vito, head, BMO Retirement Institute. “Advancements in technology, the significant role pets play in our lives and the increase in average lifespan mean Canadians must now take into account a number of new elements that, if not properly addressed in your estate plan, may leave your loved ones scrambling.”

A growing number of boomers have a personal, professional or financial presence online. This, in turn, has led to an increase in the amount of intangible digital assets that must be managed. Eighty-six percent of Canadian boomers use at least one financial online tool. They are actively involved in online areas such as finance, social networking and online data collections including photographs and music.

However, Canadians have not been addressing these in their estate plans. The study found that more than half of those with digital property believe it is important to set contingencies in case of incapacity or death. Yet, 58% with digital assets who have made formal estate planning arrangements have not included them as most did not think of it as necessary.

Aging parents are another aspect often overlooked in estate planning. Rising life expectancy has been creating a growing pool of boomers who are providing care for an aging loved one. Almost 20% of the participants said they currently provide care for an aging parent, with 53% of those providing both personal and financial support, noted the report.

The untimely death of the caregiver greatly increases the risk of the parent losing quality care if contingencies are not included in the estate plan. And yet the report found only one-third of Canadian caregivers have made a provision for their parents in their estate plan. Thirty nine percent said they had not included an older parent, relative or friend because the probability of outliving them is too small.

“It’s understandable that the idea of including your own parent in an estate plan seems out of the ordinary but, with today’s aging population, it’s necessary,” said Di Vito. “Being proactive is critical in ensuring that your loved ones are well taken care of in the event they outlive you.”

Life expectancy also plays a role in the final frontier of estate planning, pet ownership. As seniors live longer lives, pet ownership will likely rise, along with the emotional need to ensure pets are cared for after one passes away.

Recently, U.S. celebrity Oprah Winfrey made headlines when it was revealed that her dogs are set to receive $30 million (U.S.) for their care. While not all pets can, or need, such a star-like coverage, most pet owners may want to consider providing some degree of security for their pets.

While almost half (49%) of those polled own a pet, and 76% feel it is important to ensure the ongoing care of their pet, only one-third have made an estate planning provision for their pet

Talking points about 21^st century estate planning:

Have ‘the talk’: To help determine how to include aging parents as beneficiaries in your estate plan, have a frank conversation with your spouse, siblings and parents about how to ensure your parents’ continued care is not at risk.

Think digital: Think actively and openly about the digital aspects of your estate plan. Consult your lawyer about how to ensure an orderly distribution of your digital assets to loved ones so they are able to access online financials, close out email and social media accounts and retrieve sentimental digital photos or extensive music collections.

Caring for a pet: Consider leaving a reasonable monetary legacy in an estate to a caregiver who will use the funds to care for your pet. Including this provision will minimize the risk of the pet becoming abandoned or given to a shelter.